Advanced Drainage Systems: F4Q26 Earnings First Take

Research evidence excerpt

Advanced Drainage Systems: F4Q26 Earnings First Take

Deutsche Bank

Research

ubhRating Company Date

Buy Advanced Drainage 21 May 2026

Systems

North America Reuters Bloomberg Rating Buy

United States WMS.N WMS US Price target (USD) 187.00 Price at 20 May 26 136.83

52-week range 175.38 – 107.22

Industrials

US Building Products Valuation & Risks

F4Q26 Earnings First Take

Collin Verron

WMS reported F4Q26 EBITDA and EPS of $188 and $1.07, respectively, beating Research Analyst

+1-212-250-5181 consensus estimates by 5% and 13%, respectively. The beat was driven by better

than modeled sales ($677 million vs $651 million) and EBITDA margin (27.8% vs

27.4%). The beat in the quarter was largely expected. WMS provided a FY27

EBITDA guide of $1.0 billion to $1.05 billion. Sell-side consensus was at the high-

end of the range, but we suspect investors were already there given the impacts

of the Iran conflict on resin and diesel costs and WMS’s price initiatives. We

expect the stock to be flat at the open.

F4Q26 results. In the quarter, sales increased by 9.9% to $677 million (Street:

$651 million) driven by the NDS acquisition and a 2% YoY increase in organic

sales. EBITDA margin declined by 90 bps YoY to 27.8% as the margin benefits

from higher volumes and a favorable price/mix (+$13 million; DBe: +$11 million)

were offset by higher SG&A and manufacturing/transportation costs. The YoY

decline in EBITDA margin was expected with the Street modeling a steeper YoY

decline in EBITDA margin of 130 bps to 27.4%.

Segment changes. Also, in the quarter, WMS realigned its segments into

“Stormwater" and "Wastewater", which are primarily organized based on

products. The Stormwater segment primarily consists of the former Pipe and

International segments, as well as Allied Products & Other.